New Delhi: Commerce and Industry Minister Anand Sharma on Wednesday pitched for raising foreign direct investment ceiling to at least 49 per cent from the current 26 per cent to make India a major defence equipment manufacturer.
"I am in favour of raising FDI in the defence sector to at least 49 per cent not 74 per cent," Sharma said on the sidelines of CII annual general meeting here. In his speech at the AGM the Minister said, "I have recommended and I will continue to favour higher FDI in defence."
This would help India to become one of the major defence producers of the world, he added. The Department of Industrial Policy and Promotion, under Sharma's charge, in a May 2010 discussion paper had said that for the country to have state-of-the-art technology, "we have to permit anything above 50 per cent, if not 100 per cent." It had even said that 100 per cent FDI would be desirable.
India opened up the defence equipment industry to private sector in May 2001, but restricted foreign participation to 26 per cent in this capital-intensive sector.
Sharma said global experience is instructive of how defence has been a harbinger of new technologies. This, he said, is an area where India needs to take a series of measures to encourage both indigenous and collaborative ventures with defence manufacturers across the world and reduce the dependence on defence imports.
India is one of the largest defence importers in the world with a minuscule component of exports. India at present imports over $ 8 billion worth of defence equipment and its defence budget is growing at an average of 13.4 per cent annually since 2006-07.
The defence budget for the current fiscal is Rs 2.03 lakh crore, up 14 per cent over the revised estimate of 1.78 lakh crore for 2012-13.
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